Tax breaks can help reduce the financial burden of raising children. Some – although not all – of these tax breaks can be divided between the parents after a divorce, which in turn can increase the net funds available to support the children. Here is how this works.
Preliminary Requirements for Dividing Tax Breaks Between Parents
There are four preliminary requirements parents must meet before they can split the tax breaks for a child:
- The parents must be divorced or legally separated, or must have lived apart at all times for the last six months of the year;
- The parents separately or together must have provided more than half of the child’s total financial support;
- One or both parents must have custody during the year; and
- The custodial parent must have waived his or her right to claim the child as a dependent for that year, meaning that parent will not get the child’s exemption on their tax return. For this waiver to be used, the custodial parent must sign IRS Form 8332, and the noncustodial parent must always attach a copy of the Form 8332 to his or her tax return for any tax year that he or she relies on the waiver. Continue Reading